On April 1st, 2023, the Energy Bills Discount Scheme will come into effect, marking the retirement of the Energy Bill Relief Scheme.
Unfortunately for small businesses, the new scheme does not equate to new savings, as the Energy Bills Discount Scheme has been capped at £5.5bn of available support.
By comparison, the outgoing Energy Bill Relief Scheme had provided as much as £18bn to non-domestic energy consumers.
Who is Eligible for the Energy Bills Discount Scheme?
Similar to the current programme, the Energy Bills Discount Scheme will be available to those on non-domestic energy contracts, such as businesses, volunteer sector organisations, public sector organisations, and healthcare providers that are:
- On existing fixed price contracts that were agreed on or after December 1st, 2021
- Signing new fixed price contracts
- On deemed/out of contract or standard variable tariffs
- On flexible purchase or similar contracts
- On variable ‘Day Ahead Index’ (DAI) tariffs (Northern Ireland scheme only)
Expected Discounts Under the Energy Bills Discount Scheme
As per the Energy Bill Relief Scheme, non-domestic consumers will receive discounts on the unit prices of both electricity and gas.
For the 12 months following the April 1st commencement date, the maximum energy unit price discounts have been set at:
Electricity: £19.61 per megawatt hour (MWh) with a price threshold of £302 per MWh
Gas: £6.97 MWh with a price threshold of £107 per MWh
In acknowledgement of how vulnerable certain non-domestic energy consumers are to price hikes, due to their trade exposure and energy intensive activities, those companies referred to as Energy and Trade Intensive Industries (ETII) will receive greater support, with a higher maximum discount available.
However, for these types of organisations, the discount will only apply to 70% of their energy consumption across the year.
For the 12 months following the April 1st commencement date, the maximum energy unit price discounts have been set at:
Electricity: £89 per MWh with a price threshold of £185 per MWh
Gas: £40 per MWh with a price threshold of £99 per MWh
Applying to the Energy Bills Discount Scheme
The majority of non-domestic energy consumers will not have to apply to the Energy Bills Discount Scheme, as their suppliers should automatically apply cost savings to eligible customers.
ETII customers will need to apply for the upper echelon of support.
Energy suppliers will be compensated by the government for the reductions in electricity and gas unit prices that are passed onto their customers.
The Impact of the Energy Bills Discount Scheme on Small Businesses
With the new scheme presenting a significant drop in support, it is unsurprising that political commentators have flagged concerns pertaining to small business customers.
Speaking to the upcoming changes, Tina McKenzie, Policy Chair at the Federation of Small Businesses (FSB) said: “In a week’s time with the rollback of government support, this group of vulnerable small firms will see their bills revert to high rates.
“This cliff-edge will also hit consumers as businesses will have to raise prices to cope with soaring bills, driving up inflation.
“Our message to the government is: show the small business community that they’re being treated as equal partner in this energy price crisis.
“That would keep 370,000 small firms off the cliff as well as the jobs and communities which depend upon them.”
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